Shares on Wall Street gave up their early gains in midday trading on Thursday amid continued concerns about weakness in the global economy.
At 12:30 p.m., the Dow Jones industrial average was essentially flat after gaining more than 200 points at one point in the morning. The Standard & Poor’s 500-stock index was slightly lower after a plunge on Wednesday that sent it to its lowest level since early 2003. The technology-heavy Nasdaq was down 1.7 percent.
Credit markets continued to show signs of slow improvement, even as Alan Greenspan, testifying before a House committee, told lawmakers, “We are in the midst of a once-in-a century credit tsunami.”
The former chairman of the Federal Reserve also expressed optimism in the long-term outlook for the economy, saying investors would emerge from the current crisis with a “far sounder financial system.”
But the pace of change seemed to be slowing, and over all, lending remained at relatively turgid levels. The rate at which banks lend to one another, as measured by the closely watched Libor index, fell only slightly, hovering at levels before the worse of the credit freeze hit in late September. Demand for short-term Treasury bills, regarded as the safest assets around, rose slightly, indicating a small downturn in investor confidence.
The dollar was mixed against rival currencies after jumping to multiyear highs Wednesday, while gold prices fell.
Crude-oil futures were trading above their 16-month low on expectations that members of the Organization of the Petroleum Exporting Countries will decide to cut production levels when they gather Friday at a meeting in Vienna. Light crude oil was trading by midmorning at $68.80, up $2.05.
While Thursday’s economic news was largely negative, it helped in that it gave investors a clearer snapshot of the challenges ahead, said Howard Silverblatt, senior index analyst at Standard & Poor’s. On that basis, he said, traders were able to gauge which stocks were undervalued, and some began to wade back into the market’s choppy waters.
“The liquidity and banking situation, we had more difficulty with, because we knew nothing about the depth of that before it happened,” he said. “Now, at least we have an idea of what we are up against.”
Still, Mr. Silverblatt warned, the economic outlook for the immediate future was recessionary. “The crisis of the moment is the economy,” he said. “Unemployment, the earnings coming in, and the forecasts going forward. Most of the numbers are not that good.”
Indeed, there were new reports of deepening job losses on Wall Street. Shares of Goldman Sachs fell 5 percent on media reports that the company was preparing to cut about 10 percent of its 32,500 employees.
Another analyst warned not to make too much of the morning rally, which continued the wild up and down market swings of recent days. “I think what we have here is a very nervous bear market with very little liquidity,” said the analyst, Michael Holland, chairman of Holland & Company.
“This could be something as simple as a couple of hedge funds and mutual funds going in to see how things look and deciding to buy because things look cheap,” he said. “In an illiquid market like this, small moves can have considerable effects.”
Third-quarter earnings reports continued to arrive, bringing largely gloomy news. Dow Chemical, the largest American chemical maker, was up 9 percent in morning trading as it reported that its third-quarter net income rose 6.2 percent, beating analysts’ expectations.
But the Xerox Corporation reported worse-than-expected profit as the weak economy dampened spending by its largest customers. Shares fell more than 2 percent, to $7.66. Amazon.com shares were down almost 6 percent after the online bookseller forecast weaker current-quarter sales than analysts had anticipated.
In late-afternoon trading in Europe on Thursday, markets recovered from earlier losses. The FTSE 100 index in London gained 1.2 percent. The CAC 40 in Paris was up 0.4 percent, while the DAX in Frankfurt was down 1.1 percent after a 4-percent decline earlier.
In Europe, shares of Credit Suisse fell after the Swiss bank announced a third-quarter net loss of 1.3 billion Swiss francs, or about $1.1 billion, in line with forecasts.
